Press Room: Tax Release
House Approves Revenue Offsets for Short Term Highway Bill
On July 15 the House of Representatives voted 312 to 119 to extend authorization for federal highway and transit programs through December 2015. The cost of the bill is offset in part by $4.9 billion in revenue raising measures related to tax administration.
Highlights of the revenue raising measures that cleared the House
The bill provides for $4.9 billion in revenue-raising measures, including:
- Require that the tax basis of inherited property to the heir can be no greater than the value of the property as determined for estate tax purposes. The bill also requires estates with a positive estate tax liability to report the fair market value of an item of property to IRS upon the owner’s death. Under present law, the heir can rebut the use of the estate’s valuation as the tax basis by clear and convincing evidence.
- Revise tax-filing deadlines for C corporations, partnerships and S corporations. Partnerships and S corporations would be required to file by March 15. C corporations would be required to file by April 15.
- Affirm that IRS has six years to reassess taxpayers who substantially understate income due to an overstatement of basis.
- Require mortgage lenders to provide the loan origination date, the amount of outstanding principal, and the property’s address.
- Extend a temporary rule allowing the transfer of excess defined benefit plan assets to retiree medical accounts and group-term life insurance.
The House rejected a Democratic proposal to use $41 billion of revenues from modifying corporate inversion rules to partially offset the cost of long term highway funding.
Republicans in Congress have held the line on revenue raisers since taking control of the House in 2011. The revenue offered for short-term highway funding may indicate a new willingness of Republicans to support provisions related to tax administration outside the context of tax reform. This willingness to consider new revenue might eventually be extended to additional areas, such as international taxation.